A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.

June 10, 2007

Folks, if you haven't gotten the message yet, you really should right about now.

You have witnessed the end of a giant fraud-enabled housing bubble now ending in an historic housing crash that will shake the world.

Ask yourself why places like Phoenix, where housing price increases barely kept up with inflation for decades, all of a sudden, out of nowhere, shot up 55% in one year.

It was fraud folks. Pure unmitigated, unchecked fraud. With a dash of greed of course.

A wave of fraudsters, flippers, investors, and locals caught up in a grand Ponzi Scheme. One giant STD of call center jockeys, strippers, bartenders, realtors, infomercial salesmen, used car dealers and the rest gaming the system, committing mortgage fraud on a massive scale, falsely and temporarily inflating home prices, sucking cash back out of the deals in a massive bank robbery, all under the corrupt and ignorant eyes of regulators, Congress and the media.

And then it ended. Suddenly.

The funny thing is that the 22 year old stripper didn't end up holding the bag. Sure, her credit is wiped out, and she'll be back on the pole. But it's the pension funds, the hedge funds and China who ended up getting burned in the deal. Plus any unsuspecting and underwater homedebtor who listened to a realtor on commission and bought in 2003 - 2006, and neighborhoods blighted by her foreclosures.

22 years old. $2.4 million in debt. Admitted mortgage fraud. 10 foreclosed houses. I think this stripper could be Casey's alter ego!

How many more are out there folks? Jail time anyone? Anyone? Anyone?

'Straw buyer' deals fuel tidal wave of foreclosures

She was 22 and tired of exotic dancing for a living. So Irene Thomas bet her future on real estate, hoping that becoming a landlord would be her first step toward exiting the stage.

With the help of Universal Mortgage Inc., a brokerage company in Brooklyn Park, Thomas signed the papers to buy a house early last year. And she kept signing. And signing.

In 90 days, with none of her money down, Thomas had $2.4 million in debt and 10 houses in her name, most in north Minneapolis. Nine belonged to officials of Universal, the same company that handled the transactions for her.

Less than 18 months later, Thomas was losing every property to foreclosure after the monthly payments weren't made. Her credit ruined, she now says she was duped by a group of real estate insiders who sold houses at inflated prices.

The practice is so commonplace that real estate experts say it is helping fuel the nation's foreclosure epidemic, which is destabilizing neighborhoods as home after home is lost to banks and other lenders.

Even the local Spanish Newspaper here in SD did an item yesterday on Fraud - diariosandiego.com

In any language it spells BIG trouble. . .let's see. . .subprime blowup, alt-A blowup and spreading up the ladder, record empty homes, almost no sales, developers going out of business and slashing prices. . .foreclosures soaring, and 80 lenders kaput. . .what next??? Perhaps Paris Hilton will tell her fans to rent???

This is entirely the fault of the mortgage lender and the stripper. Knowing she could not afford the loans the mortgage company should not have made them. Realising she could not pay even the interest on 2.4million she should never have taken out the mortgages.

The end result is the right one. The mortgage lender will go out of business and the stripper will go bankrupt.

There is also no love lost for the pension fund trying to make a quick buck with bad debt. That's why it's called risk. If the government steps in, the mortgage lender will be bailed out, the stripper will be bailed out, even the pension funds will be bailed out. I, however, having not bought a house during the boom will face inflated prices and higher interest rates and more taxes to cover the cost of bailing out all those idiots.

Strippers and bubbles. . .hmmmm now THERE is an interesting blog item. . .think I'll make the rounds of the Strip Clubs at the Marine Bases around here - btw - Oceanside (right next to Camp Pendelton Marine Base) has the most number of strip clubs, and one of the highest foreclosure rates in SD County. . .maybe you are on to something.

Sorry for so many postings. . .but . . .Realtors back to Strippers! They already have the clothes for it. . .everytime I see some babe in a miniskirt around downtown SD, I KNOW she is a Realtor (tm)- they all have "soap opera hair" and are named Bambi or Kelli or Cheri. . .an easy transition I would say.

Someone do some HP market research, visit your local strip clubs, and tell us what percent of the girls are involved in some way with real estate - either flipping houses, working as a realtor or mortgage broker, former realtors, or former mortgage brokers

I'd like to know the stat with bartenders too.

I bet it's big. like 30%+ I'd guess

I'd also like to know if strip club revenue is drying up along with the collapse of mortgage brokers and flippers.

there's a real story here, and HP'ers are just the folks to do the hard research

Lol...but this story is unfathomable. I really mean that. My mind can't even grasp these insane concepts anymore. It's like we live in another dimension. It feels like I'm watching a never - ending episode of the Twilight Zone but without Rod Serling to teach a lesson and bring some closure to it all at the end. So basically, for the last five years, everyone in America no matter how broke was a millionaire or could have been one. Since it's all going to come crashing down anyway, I'm starting to think the HPers who always say "I should have taken out a loan...." are right. We should have all just taken out huge loans and laid back with some good mixed drinks until the crash. To say this will all end in catastrophe is putting it far too mildly.

still don't see prices coming down. maybe vegas or other condo crazy area's but I don't see any significant price drops. I've reported here over a year and continue selling my properties at big profits. Just closed the other day in salt lake city and have 45 days 1031 to buy something else. I want to buy in maui where i currently live but this stubborn guy who is selling a piece of raw land for 499,999 won't come down to my 409,000 offer. He's been trying to sell for over a 1 1/2 years. Even at 409,000 i think it's to much. I getting frustrated on the the buy side. I have one more property in salt lake to dump for about a 100,000 profit. Waiting for mid august to dump below lowest priced condo do to i bought first and have alot of room to drop price and f everyone who bought to high. Socal friends are still buying shit houses for 1/2 million and think they got a great deal. Those house sold in 99 for 180,000 and at the time i thought that was to much. The prices all hanging with i/o's and intro rates. It will get alot worse, it has not even began. IN THE EARLY 90'S IN SOCAL I SAW PEOPLE WALKING AWAY FROM UNFINISHED HOUSES AND EVEN THE REO HOUSES WOULD NOT SELL AT THE LOWER PRICES. IT'S GOING TO BE BAD. I REMEMBER WHEN MY BRO WAS WORKING AT YAHOO HOPING FOR HIS STOCK OPTIONS SAYING HE WAS GOING TO BE A MILLIONAIRE AND TELLING ME TO BUY AT 250 YAHOO PRICE IN 99-00 HE WAS A LITTLE TO LATE AND KNEW IT WAS ALL BS. I FEEL LUCKY BUT I AM WANTING A PRICE CRASH AS I CAN SELL FIRST. F EVERYONE. AND THE FRAUDSTERS. ITS ALL FRAUD VERY FEW MAKE THE MONEY TO BUY AT THESE PRICES.

I dont know who this expert is but all the governments of the world and all their populations combined cannot "bail out" the derivitaves market. Governments could act to place the system into receivership thereby freezing the derivatives but there's no hope of any bail out. At least by sane people.

What youre likely to see instead is the toppling of governments and regimes as the collapse intensifies and the bankers go for a fascist rule to keep power. Asset grabs, raw material cartels etc.But no bailout in the derivatives market is possible. That ship sailed 15 years ago.

Pete said... Keith, I propose a new HP Rule: If you have a story about a stripper, you must include a picture of the stripper. Or at least a picture of A STRIPPER!!! (and she has to be hot looking) LOL

June 11, 2007 3:02 AM

===============================Hey, when Keith takes his Vegas trip, he needs to load up on blog photos for the website. The shock of his life might be expecting to see young hot gals at the strip club, and out comes boomer chicks massively in debt and 30 years past their prime. The club owner will say they're willing to work for pennies on the dollar so I decided to give them a shot.

I fail to see this stripper thing. You bring it up all the time with the implication that strippers don't have money. You do realize that they make more than 95% of your readers right? If she works the right clubs, she's making $150K a year easy, of which $100K isn't taxed. And that's working 3-4 nights a week.

As for th $2.4M in debt thing, again you pick one story and extraplate from that a trend. Does EVERY stripper have $2.4M in debt? I doubt it. I'm also sure you can find a story about a surgeon with $2.4M in debt or an accountant or a bus driver for that matter. So again, what does this story say? One incident of bad investments. Stupid people invest in stupid investments all the time.

Here we are 2 years into the "crash" and prices are not budging. You can scour the web all day for fun stories like this and they are fun to read. But at the end of the day, prices are still not coming down.

Some dull-normal pole dancer signed everything some suit-wearing con artists put in front of her, and now she's so loaded up with debt she has to bankrupt, and the suits get cashed out?

What's so unusual, here? That sounds just like what's happening (albeit slowly) with millions of people and their fund managers. Lots of people are going to find out that they won't have the retirement plans they had set their hearts on. Instead of using their hearts, they should have used their minds.

Fund-manager crooks are going to get off even MORE scot free than these mortgage-company crooks. Wall Street is making every move extant in order to setup their escape routes.

THAT is why I never put my money in anything more risky than a FDIC-insured CD since 1997. Those stereotypical anonymous posters will probably laugh at that, but I never saw my wealth disappear down the speculation hole in 2000 and now today. 3-5%, risk free? I'll take that. It may not keep up with inflation, but my voracious savings rate (unlike 90% of America) more than makes up for THAT. And, YES ... I save a lot of money by RENTING!

"Alas, I must be doing something horribly wrong. I have *yet* to have a stripper looking to commit mortgage fraud as a client.'

Can't you guys see that organized crime set up mortgage companies and used their network of strippers to commit fraud? The Sopranos of America (and Russians, and Israelis, and Asians, and Bikers, and M13, etc) were all over this great opportunity to make a quick buck. You guys act like strippers are independent contractors.

Troll, prices are coming down everywhere. In Tampa, for instance, homes that were sold for $320k at bubble's peak are now selling for $145k at firesale auctions. Why don't you read Ben's "The Housing Bubble Blog" to check the gazillion examples he posts everyday day?You are in denial.

What if they all have been suckered by lenders into paying ten times what their properties are worth, and those places were only worth the ten percent down total, there could be a to huge amount of suckers, so it can not happen, as the mass mind masses fooled in the greatest number theory only works in the stock market ala Wall Street, not housing that would depress and stay low or stagnant for thirty years, until heirs forget the "true" value and sell at the then current market prices or values, for mass foolings yeild angers not soon admitted are forgoten...

if you have rented since 1997 you have lost on an enormous amount. Bubble or no bubble.

June 11, 2007 9:49 PM----------Agreed, but only by happenstance, i.e. chance. If you rented and put you're money in stocks then you took a hit when the bubble burst & if you stayed in stocks you'd only now be recovering. If you owned a home & SOLD then you've made a killing in MOST coastal markets. But with normal appreciation =~inflation then you'd have only owned to have a home & not as an investment. There will be many double burn people (lost in stocks & in RE) There will some that consciously hit it big on both. Some will cancel out their losses and gains. Personally I ended up on the positive side for both but not due to conscious design, but due to the timing of life circumstances. In 1998 I sold off all my stocks because I was leaving the military & wanted to pay off my student loans & purchase a condo in Metro DC because when I ran the numbers owning beat renting. Another year or so stocks continued to clime & I missed out on thousands of dollars of gains, but then came the crash and in the greater scheme of things I'd come out ahead. Fast forward to 2004 I sold my condo to move away for another job. I made a huge tax-free gain. Six months later prices peaked & I missed out on another 50k!! Then the slide & now they only sell back down to my 04 sale price and that does not include incentives!! My new job went south, I had purchased & got caught on the down side of the bubble. I'm still ahead but back in DC and a run of the numbers says rent.

"You bring it up all the time with the implication that strippers don't have money. You do realize that they make more than 95% of your readers right?"

They are usually the equivalent of the pro atheletes of skankdom. Some (the erotic and good looking ones) make a killing for 5 years, maybe ten but the rigors (both physical and emotional) of making a living their a**es wears on them. Some, (the bright ones) realize that this is not going to be a life long job and save, save, save but many are not so good with money and fall into some nasty (and expensive) habits. They burn brightly and then burn out. Think run of the mill NFL defensive lineman. The knees wear out (so to speak).

anon @ June 11, 2007 9:49 PM: if you have rented since 1997 you have lost on an enormous amount. Bubble or no bubble.

No, I've missed out on overpaying on housing and experiencing personal bankruptcy. All I "lost" was risk. The only "enormous amount" I missed out on was the level of debt that I'm not now in.

Thanks for playing, you idiot. A minority of the nation is economically secure enough to play in the constant speculation markets that infected all aspects of American life, starting in the 1980s. I keep my powder dry and shoot carefully and sparingly. The rest of you can zoom right by me on the highway in your snazzy SUVs for all I f*cking care. After watching your expensive cars depart into the distance, I'll go back to my humble abode and enjoy the lack of stress that my simple lifestyle gains me. Can even a fraction of you say the same?

Most strippers go broke and are in debt because they spend more than they make. If they were smart, they would be doing something besides selling their body to sleazy old drunk men. The smoke, drugs and alcohol ruins their skin by the time they're 30 and it's all downhill from there.